In 2003, European Commission believed there were 18 relevant telecoms product markets susceptible for ex ante regulation across Europe. In 2007, the number went down to 7. According to the 2014 edition of the Commission Recommendation on Relevant Markets for Electronic Communications Networks and Services that are susceptible to ex ante regulatory measures, we should be left with only 4 relevant markets. Is this a true reflection of a gradual shift to a fully competitive market for electronic communications networks and services, or a ritual with limited market effects?
Indeed, competition has significantly increased in European countries from 2003 to 2007 due to belated effects of the 2000-mandated local loop unbundling and newly introduced fixed bitstream regulation. The Commission was right to take some credit for this: the robust policies pursued by Commissioner Viviane Reding and her team contributed to dismantling of the local access monopolies across Europe and brought more choice to consumers in old and new Member States. But what exactly happened between 2007 and 2014 that would call for further reduction in the number of regulated markets?
Relevant markets: pre-programmed de-regulation
Back in 2011, I argued in my PhD thesis that EU telecoms law is a pre-programmed system based on a self-referential dogma that, notwithstanding legacy bottlenecks and natural monopoly elements, liberalised telecoms relevant markets evolve towards effective competition. Accordingly, all regulatory measures should be gradually scaled down in order to reflect this development, as should the list of relevant markets susceptible for regulatory measures. Indeed, repeating the latter ritual in 2014 has not proven to be a big challenge for the Commission. After all, the criteria for ex ante regulation are not only vague and slippery, but also set by the Commission itself.
What the Commission should not have ignored, however, is the fact that, between 2007 and 2014, the EU drastically fell behind the global leaders in FTTH roll out, its leading economy’s national incumbent VDSL broadband network hardly worthy of its world-class manufacturing industries. Ironically, during the same period, one of its latest (and poorest) new Member States has become a regional leader in fibre infrastructure, mainly thanks to the business initiative of a new market entrant and planning chaos, regardless of the national regulator’s failure to implement useful measures promoted by the EU (such as duct sharing).
The EU no longer a prototype of successful regulation
It is time for Europe to stop measuring the progress of its telecoms sector through the amount of regulatory measures or relevant markets subject to ex ante regulation. The EU used to be the role model for telecoms liberalisation. As years went by, however, the global initiative was taken over by Australia, New Zealand, Singapore and Qatar with their respective open broadband infrastructure companies or ‘NetCos’. When it comes to balancing service competition and infrastructure investment, European best practices in places like Sweden are more local than national or European.
With its regulated relevant markets ritual, European regulation is becoming similar to the US never-ending story of information vs. communications services classification, creating a landscape where regulatory rules serve as a gadget for politicians and lawyers rather than a tool to cure market failures.
The way forward
Rethinking EU telecoms policy would therefore be more important than creating impressions. And please do not tell me this is already happening with the Connected Continent Regulation. It is not: see Aphaia’s white paper on the review of the new EU Electronic Communications Regulatory Framework proposal.
As Aphaia and its partner companyVentura Team recently observed, a way more thorough reform is needed (as described in Aphaia’s white paper on how to resolve the European rural fibre investment grodlock), and we shall shortly be back with a more thorough action plan.